On Monday, my family and I celebrated my wife Diana’s birthday. We had originally intended to go to Atlanta for a long weekend. The highlight of the trip would have been seeing the Yankees play the Braves on Monday night. Unfortunately, with the high incidence of Covid-19 cases in Atlanta, we decided not to go. All of us are vaccinated, but we didn’t want to run the risk that any of our kids would start the year with the coronavirus.
Monday’s weather was beautiful. We spent the day doing outdoor activities. After that, we shared a nice meal and ate birthday cake when we were back home.
Last week I talked about how we would be helping two of our boys move into their college residences this week. The experience was much more difficult than I imagined at the time. In some ways, it was harder taking our son Daniel to school to start his junior year than it was when we took him to school the first time. I shared some of my feelings about Daniel going back to school with him the morning of the day we left. He agreed that it seemed harder for him to go this time, too. It was comforting to know that I wasn’t alone in feeling that way.
I already knew it would be hard taking Michael to start his first year of college. Perhaps taking Daniel was made even harder because we have two kids leaving at the same time.
There’s more to it though. During the pandemic, all four of our children have lived at home. It has been wonderful having them all with us every day. Once our oldest, Joshua, went to college, we figured the six of us would only be here over the summer.
Then the pandemic hit, and everyone was living at home. I can’t begin to say how fortunate Diana and I are to get so much extra time with our kids. In the end, it was good for them, too. Siblings often bicker. They don’t always get along.
Looking back to March 2020 and comparing it to today, I would say that our kids get along better now. They talk to each other more. I enjoy listening to their conversations. They also are there for each other more, too. All three of our boys look after their sister, Sarah. They also all pitch in when needed to take her places when Diana or I can’t.
I want Daniel and Michael to have a more normal school year and experience college life the way they should. At the same time, it’s already hard knowing they’re not going to be joining us for dinner. Seeing their empty rooms, or their favorite spots around the house empty will be difficult.
Daniel has claimed a spot on the couch in our basement as his favorite spot when he needs alone time. I’ve gotten so used to seeing him there that I often look for him even when I know he won’t be there – like when I’m letting our dogs out early in the morning. I suspect that even though he’s away at school, I’ll keep looking for him for a while. At least until I get used to him being away again.
As for Michael, what I’ll miss the most is when he comes downstairs in the morning – sometimes it’s early in the afternoon – to say good morning to me. If we strike up a good conversation, he will sit in the chair in my office – the one you can see in the background when I’m on a Zoom call. Those quiet conversations are special moments. I will miss them.
I’m glad Daniel and Michael will still be close – without traffic, they’re only a little more than an hour away. At the same time, I know we can’t interfere with their college experience too much. I also appreciated it when Daniel said to me that he wouldn’t be that far away. He said it would be okay to visit. We will visit both boys. But not too much. They need to have time to grow and have some new experiences on their own, too.
The pandemic hurt so many of us in so many ways. I think it hurt children the most. They need socialization. They need independence. They need to have time on their own. But there was also a good side for us. Of course, I know the pandemic hurt everyone in some way. An older client canceled a “bucket list” trip to Europe – by motorcycle. He told me he was afraid that by the time he’s allowed to go, he’ll be too old to go. I hope that’s not the case. His comment also opened my eyes to other ways the pandemic could affect us.
As I discussed in “Confessions of a Financial Advisor”, I met with my father right before the pandemic started for the first time in more than 25 years. Since then, we email every day. We text occasionally. We see each other on Zoom from time to time as well. A few weeks ago, he and his significant other came for a visit and stayed in our house. My sister joined us as well. I admit the idea was a little scary at first. But it went well. It was nice to have them here. Hopefully, they can visit with us again.
As discussed in my “Confessions” blog, my experiences growing up taught me a lot about how not to manage your finances. Financial planning is about more than finances. It’s about living the life you desire. It includes setting goals to help you achieve what matters most to you. I try to put those principles into practice when working with clients. I also try to remember that in my personal life as well. To me, the positives I take from our pandemic experience over the past 18 months show that, as a family, we’re doing that at least to some extent.
In the meantime, Diana and I aren’t empty nesters yet. We will appreciate having more time with Joshua and Sarah. Our home will be less full, but it won’t be empty. We’ll still have time to be with our kids. I look forward to bike rides and disc golf, watching girl’s lacrosse games, swimming, neighborhood walks, watching movies, and having good conversations. I’ll also have to get used to buying less food and cooking for fewer people.
As always, thanks for indulging me while I share some personal thoughts.
Family is important. Taking care of your kids is, too. If you are still saving for your kid’s (or kids’) college education, read this week’s first article. Many parents – and kids – underestimate the cost of a college education.
Investment Commentary
The S&P 500 Index closed Wednesday at 4,496.19. This marks the 49th time this year the S&P closed at a new record high. It continues to be another great year for investors. As we near the end of August, the S&P is up 2.3% for the month and 4.6% so far this quarter. It’s also 19.7% higher year-to-date.
This week, markets have risen after U.S. regulators gave full approval to one of the Covid-19 vaccines. The move raised hopes that the number of those vaccinated would increase. This could also bring the country a step closer to eventually moving past the pandemic.
In the meantime, uncertainty remains. There are many pieces of conflicting information related to factors such as the spread of the Delta variant of Covid-19 and the potential for higher inflation. Inflation could have an impact on Fed policy as well. This makes it more challenging to evaluate what will happen to people, businesses, and the economy.
As I’ve discussed in the past, forecasting the market’s future performance is a fool’s errand. Nobody can make accurate forecasts with any degree of reliability or consistency.
Against this backdrop, I believe the best approach is to continue to maintain a long-term focus and a positive long-term view. If you invest, you are expressing a view that the market will move higher over time. Will there be corrections and bear markets along the way? Yes. But we don’t know when they will happen. Sitting on the sidelines waiting for the next market downturn is rarely a successful strategy. After all, how will you know the right moment to invest? It’s important to stick to your process and not let the emotions of fear and greed drive your decision-making.
Here are the links to this week’s articles as well as a brief description of each:
1. College Costs Are Rising and Many Families Have No Idea Just How Expensive Higher Education Is. As mentioned above, we helped two of our kids move into their college residences this week. Most parents I speak to express a willingness to help pay for their kids’ education. They don’t want them to graduate with significant levels of student loan debt. According to this article, 69% of the graduates in the Class of 2019 took out student loans. They graduated with an average debt of $29,900. In addition, 14% of their parents borrowed another $37,200 in federal parent PLUS loans as well. Paying for college can be daunting. Many parents and students underestimate the true cost of college. Others expect mistakenly expect their children to get scholarships or financial aid. When working on client financial plans, Apprise tries to help parents take a realistic look at what a college education can cost. We also provide guidance about how much to save.
2. A Guide to Developing a Deep Reading Habit. I love to read whenever I can. I read to learn about new things. I read to further develop the ways I can help clients. I read to understand things I already know better. I read for enjoyment, too. By sharing articles, I try to encourage others to read more, too. It’s not only about how much you read. It’s also about reading better. This article shares some tips to help you develop a nonfiction deep reading habit. You may want to review this article, too.
3. The Most-Overlooked Tax Breaks for Retirees. One can argue that retirees can benefit more from tax breaks than those who still work. It can matter most when you’re living on a fixed income. Why? You must make the money you saved while working last the rest of your life. You no longer can increase your savings rate to grow your savings faster. Unfortunately, many seniors don’t know about some important ways they can save taxes. Keep the following in mind – and check out the article for the rest of the ideas:
· Spousal IRA Contribution – if you’re married and your spouse still works.
· The RMD workaround – a great way to make your estimated tax payments.
· Give Money to Charity – you can transfer money from your traditional IRAs directly to your favorite charity.
· Give Money to your Family – you can lower the value of your taxable estate.
4. Read This: How Dollar Stores Scammed America to Become Worth More Than Coca-Cola. Who doesn’t love to find a bargain? We often associate bargains with low prices. That’s not always true. According to research cited in this article, “for every $1 in sales, Dollar General and Dollar Tree earn an average gross profit of ~$0.30.” Would you believe rivals like Target and Walmart have lower gross profit margins? The same research says they do – $0.28 and $0.24, respectively. Paying only a dollar to buy an item makes it sound cheap. On a per-unit basis, it can be expensive. Sure, a convenience element exits. Plus, buying small quantities makes sense in some cases. It can reduce waste. This article states a motive for selling small quantities. It does not sound ethical.
5. Deciding Between a Traditional or a Roth 401(k)? Here’s What to Consider. Clients often ask whether retirement savings be in a traditional or a Roth IRA. It’s smart to save in either type of account. There are some significant differences between the two. They come with their pros and cons as well. The primary difference centers on when the money gets taxed. The answer isn’t the same for everyone either. Personal circumstances matter. The article shares some things to consider when choosing between the two.
· When you want to pay taxes
· Your age
· Where you live
· How much you can afford to save
In the end, you may want to use both. You may also want to consider Roth conversions. They can be most helpful if you retire before you must start taking your required minimum distributions – age 72. If you have any questions about this topic, please schedule a free call.
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Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
